New Crypto Reporting Will Require Rigorous Recordkeeping

Private Wealth Services attorney Shaina Kamen and Max Angel co-authored a Law360 article breaking down increased regulatory oversight and reporting requirements surrounding cryptocurrency transactions. The IRS recently began requiring brokers to report investor sales and exchanges in relation to crypto transactions, and noncompliance could lead to accuracy penalties. In addition, any form of virtual currency is treated as property, not cash, for federal tax purposes, meaning principles of property taxation apply to crypto deals. In this article, the authors review several situations that could trigger reporting requirements with the IRS, from selling digital assets to receiving them through mining or airdrops, from to gifting cryptocurrency to donating it to charity. Above all, they emphasize the importance of diligent recordkeeping and compliance, lest an unwary investor be caught off guard by a government investigation.

Ms. Kamen and Mr. Angel also published a Holland & Knight client alert on this topic.

READ: New Crypto Reporting Will Require Rigorous Recordkeeping